Wealthy buyers exploit stamp duty loophole

Buyers of some of Britain's most expensive homes may avoid paying the new 5% rate of stamp duty on £1m-plus properties thanks to a taxloophole allowing houses and flats to be registered in the names of companies rather than individuals.

The rise – from 4% to 5% – comes into effect in April and means that duty on a home costing, say, £1.5m will rise from £60,000 to £75,000. Duty on a £10m estate rises from £400,000 to £500,000. Some buyers are trying to rush purchases through before the increase is implemented, but the richest buyers have discovered a legal route that almost avoids the tax altogether.

This is done by setting up an offshore company – typically registered in a tax haven such as the British Virgin Islands or Panama – specifically to buy a property. The company may cost tens of thousands to set up, but this route is already taken by rich overseas purchasers of property in the UK, and by wealthy Britons based abroad.